The Goldman Sachs Op-Ed

Everyone online is sort of sniffing at the already-infamous “Why I’m Leaving Goldman Sachs” op-ed in today’s Times, and much of that sniffing is understandable. Lots of people definitely know, assume or simply believe that Goldman has been for much of the last decade (or longer) in the service of steering their clients wrong in favor of profits. This is a totally reasonable (and valid!) conclusion, after all, after the activity of the last five years. (Particularly for anyone who saw their incredibly terrible returns on investment after ill-timed BRIC-chasing and plenty of other recession-era disasters.) And so their point is: well, what were you doing, Greg Smith, staying there for so long while it all apparently went so wrong? What were you doing to steer the culture away from being bad advisors and pigs?

That reaction has… some truth to it. Some of these scoffers are not wrong. Goldman, meanwhile, is doing its part to undermine him. But all the scoffing overlooks a few facts.

When Greg Smith writes about the culture of Goldman — “teamwork, integrity, a spirit of humility” — those are not just empty words. They sound funny from the outside, sure! But “the Goldman way” was drilled into employees and executives in a way that likely has no other workplace equal in intensity outside of perhaps the Marines or the Symbionese Liberation Army. Being self-effacing; saying “we”; sharing credit; posting your working group on developments: people who bucked this process were beaten down until they conformed.

This culture — which also highly valued do-gooding and public service, or at least the ideas of such — is pretty much just brainwashing. (Not bad brainwashing particularly! But all the same.) That state prevents employees from realizing that Goldman’s history of making money at any cost might have always been a part of the culture of the firm.

And you can see how he’s internalized this brainwashing.

I think he truly believes, based on his 2nd paragraph, that if GC serves the interests of their client, they are serving the world. #koolaid

— Judd Greenstein (@juddgreenstein) March 14, 2012

While people in media and other fields are constantly flouncing out and making dramatic pronouncements about the evils of their former employers, breaking publicly with the firm is so completely outside the boundaries of what’s conceivable that this deserves a little more respect that it’s getting. (Although, true too: it would have been nice if he’d been a bit more specific. For him, these are bomb-throwing words; for us, it’s hard to cut through his op-ed to find the meat of the matter. There’s not so much there beside his actual declaration of being betrayed, right?)

Biggest reaction I’m getting from people outside of $GS: “Did Smith just notice that $GS has a corrupt culture?”

— John Carney (@carney) March 14, 2012

Still, the criticism also overlooks the departure agreements and the like: the contractual leg of the deep culture of privacy. When people depart the firm — willingly or unwillingly — the enormous agreements, obviously, forbid people from speaking about the firm. (In fact, the termination agreements for layoffs said that former employees would forego any promised compensation not just if they spoke about the firm in any way but would forego payments in a number of other circumstances, including just being charged with a crime.) While I’m sure Smith isn’t in the slightest hurting for money, he is now considered the ultimate traitor.

This is a firm that researches its opponents as deeply as any mafia. This is a firm that thinks nothing of sending a former programmer to jail because he was trying to back up some opensource software and included chunks of what the firm considered proprietary software; they stopped at nothing to ruin him along the way. This is a firm that’s been nearshoring in Utah for years, so as to capture a highly immobile and not coincidentally highly moral worker population. This is a firm that got vast, disgusting concessions from the City of New York because they pretended they were going to move out of downtown — and then, even after receiving them, expanded their New Jersey headcount, due to more concessions on the other side of the river. This is a firm that practices surveillance-level research on its negotiation counterparties, and has no qualms about bringing their information and forensics to bear in negotiations.

While many of us feel like this is just another tardy confirmation of what we all already knew — which, well, it is! — this is still incredibly damaging for the firm. Goldman’s reputation right now is, rather deservedly, fairly terrible. Anyone who’s previously worked there who’s brought up their former employer in public has been, over the last two years, subject to actual face-to-face scorn. (Which is probably for the best! Society should shame those who damage it!)

Traders and hedgies are reading Greg Smith’s Dear Goldman letter in utter confusion. “Wait. You mean those things are wrong?”

— Epicurean Dealmaker (@EpicureanDeal) March 14, 2012

But the venue of the Times gives rich people — actual Goldman clients, who don’t read Rolling Stone, or our stupid blogs and snippy Twitter accounts — something to have their assistants print out. They’ll actually read this, and they have phones on their private planes to call their friends.

Meanwhile, the Internet will do what it does best.

The “Greg Smith as hero” narrative will shift over to the “Counterintuitive takedowns of Greg Smith” narrative by the end of the day.

— Hamilton Nolan (@hamiltonnolan) March 14, 2012